By Nurys Santos, CPA, CVA, CFE – Santos Consulting CPA, PLLC

At Santos Consulting, I believe tax planning isn’t just about reducing what you owe—it’s about creating the foundation for financial freedom and legacy building. That’s why this month’s blog highlights practical answers to the most common tax questions—and what they mean for you as an entrepreneur, investor, or growth-minded professional.

Common Tax Situations

That Could Cost (or Save) You

1. Loan Forgiveness = Taxable Income?
If a loan is canceled or forgiven (including vendor agreements or private debt), the IRS may count that forgiven amount as taxable income. Look out for Form 1099-C and talk to a tax advisor to see if any exceptions apply.

2. Your Kids' Lemonade Stand Is Technically Taxable
If your child makes money—even from babysitting or lawn care—the IRS considers that earned income. While they may not owe federal income tax (standard deduction is $15,000), earnings over $400 are still subject to self-employment tax.

3. Credit Card Rewards: Not Always Free Money
Rewards tied to purchases are tax-free, but referral bonuses or welcome gifts that aren't linked to spending are taxable. This applies to personal and business credit cards, especially those used for travel or advertising.

4. Employer 401(k) Matches Don't Count Toward Your Limit
If you're contributing to a retirement plan, your limit for 2025 is $23,500, or $31,000 if you’re over 50. Employer contributions are extra—so use them fully if you're self-employed or have a Solo 401(k).

5. Retirement Account Loans Must Be Repaid if You Leave Your Job
Borrowed from your 401(k) and thinking about leaving your employer? If the loan isn’t paid back quickly, it may be taxed as an early withdrawal—with penalties.

6. Gift Reporting Thresholds Increased
Gifts over $19,000 per person ($38,000 for married couples) require filing a gift tax return. This is part of lifetime tracking toward the $13.99M exemption ($27.98M if married). Essential for business succession and family wealth planning.

7. Always Report Losses – They Can Work for You Later
Losses from investments or your business can offset future income. Even if you think they don’t “count” now, properly reporting them ensures long-term tax savings through carryforward strategies.

Financial Planning Tip:

Custodial Accounts vs. Smarter Tools

Custodial accounts are a great way to teach kids financial responsibility, but come with important trade-offs:

• Kiddie Tax: Unearned income over $2,700 is taxed at the parent’s rate.

• Financial Aid Penalty: These accounts reduce FAFSA eligibility more than parent-owned accounts.

• Loss of Control: At age 18 or 21, your child can use the money however they want.

Smarter Options?
Roth IRAs for kids with earned income, 529 college savings plans, and splitting savings across multiple account types give you more control and better tax outcomes.

Bonus Tip:

Trim Your Food Budget Without Sacrificing Quality

Food costs are rising—but there are smart ways to cut your grocery bill without sacrificing health or time:

• Plan meals around what you already have

• Use a "Use-It-Up" week to avoid waste

• Shop by discounted proteins and build themed meals

• Buy dry goods in bulk and freeze fresh items before they spoil

Final Thought: Influence Shapes Habits

What you see, hear, and consume daily influences your financial decisions more than you realize. Media, technology, and your social circle affect how you invest, spend, and even save.

Be intentional. Choose your influences the same way you choose your tax strategy—with purpose.

If any of these topics affect you or your business, let’s talk. The earlier we plan, the more we save—and the more empowered you’ll feel about your finances.

Book a consultation now to create your personalized tax and wealth-building roadmap.